RIYADH: Saudi Electricity Co. (SEC) missed forecasts with a 4.1 percent drop in second-quarter net profit and blamed the continuing impact of inflation on its operating costs.
The Gulf’s largest utility by market value made SR781 million ($208.3 million) in the three months to June 30, compared with SR814.2 million in the year-earlier period, it said in a statement posted on the bourse website.
“The decline in profits is due to the continuing impact of the rise in the first-quarter losses and which resulted from the increase in inflation rates reflected on operating costs and prices of goods and services,” it said.
SEC also blamed growing costs from the launch of new plants on the financial performance. The profit was below the average SR976.8 million forecast of four analysts in a Reuters survey last month.
SEC traditionally reports losses in the first and fourth quarters when milder temperatures lower consumption.
Chief Executive Ali Al-Barrak told Reuters in April that air-conditioning is behind about 70 percent of the firm’s sales. SEC made its biggest loss in at least four years in the first quarter on a decline in sales and a surge in investment costs. SEC also has to implement government measure meant to help state employees and pensioners cope with a surge in inflation, including a commitment raise wages by 5 percent annually between 2008 and 2010. It employs around 28,000 people.